Money from a government scheme supposedly aimed to help first-time property buyers could end up being used to subsidise property owners seeking to rent out their assets to make a quick buck.  

This potential racket was flagged in an investigation by the National Audit Office which analysed a Housing Authority scheme meant to help potential first-time property buyers who do not have the necessary financial means. Under this scheme, applicants qualify for a €10,000 grant which is redeemed over a 10-yer period, through equal €1,000 annual instalments. However, such grant is only available on condition that the property in question is the applicant’s ordinary residence.

In 2023, some €3 million were allocated to this scheme for which 4,612 applications were submitted by February 2024.

One of they key issues flagged by the NAO relates to the fact that when applications are being processed, no checks are being carried out to verify if the property in question is included in the rental register – ie being rented out. Such verification would only be carried out in case of a request by a third party. Nonetheless, even if such verification process is triggered, the system is flawed as any minor difference in the address would not yield a match. In other words, an applicant seeking to benefit from this €10,000 grant for a property which is being rented out, will submit a slightly different address, in order to evade any possible red flags.

In its recommendations the NAO called for the HA to liaise with the Property Rents Section within HA itself, to conduct appropriate checking in this regard on an annual basis. Another check could be with the Malta Tourism Authority to make sure that it is also not licensed to operate as short-let accommodation. Moreover, HA can liaise with other departments or Government entities to obtain the facility of a search function that is more user-friendly, thus facilitating the possibility to look for properties and related information more easily within the available database. 

However, the HA management had cold feet on such suggestions citing the “laborious” process which such verification would require would constitute an “administrative burden”. More, the NAO was told that addresses listed in property deeds were often incomplete or inaccurate, making it difficult to locate properties in the property rental register. However, the HA promised to explore the possibility of integration with other Government databases to facilitate more accurate property searches.

In its investigation the NAO, expressed concern that even in though cases whereby a report of possible abuse had been filed with the HA, the action taken was belated and insufficient.

In a particular instance, the owner of a property in a block of apartments who applied under the scheme for first-time buyers was issued the first payment of €1,000 in June 2023. A formal report dated October 2023 was received by HA from a legal entity, stating that the said property was being rented out by the owner to third parties. Following a 24-hour prior notice given to the owner, the attempt for the first two inspections was only made in March 2024. However, these proved futile. Hence, no evidence was obtained to corroborate the claim. NAO was informed that the second payment, due to be paid in 2024, will still be issued accordingly.

While the HA agreed that timely and efficient action is crucial to deter abuse, it cited possible legal issues governed by the Private Residential Leases Act (Cap. 604), which requires a 24-hour notice and, in some cases, a warrant from a magistrate, to make onsite inspections.